MILAN (Reuters) - Investment funds Fortress and Elliott have dropped out of talks to buy Monte dei Paschi di Siena's bad loans, three sources said on Friday, dealing a blow to plans to secure a state bailout for the ailing Italian bank.

MILAN (Reuters) - Investment funds Fortress and Elliott have dropped out of talks to buy Monte dei Paschi di Siena's bad loans, three sources said on Friday, dealing a blow to plans to secure a state bailout for the ailing Italian bank.